After a bad week, Ft. Worth-based RadioShack Corp. Chief Executive Dave Edmondson resigned yesterday by “mutual agreement” with the company’s board under which Edmundson will receive a severance package valued at about $1.5 million.
Public disclosure early last week of Edmundson’s resumÈ fluffing was bad enough, but the final straw in Edmundson’s fate was RadioShack’s announcement late last week that it is planning on closing as many as 700 stores and taking a large write-down. Although company revenue rose about 5% to $1.67 billion in the quarter ended Dec. 31, the company’s profit for the quarter dropped 62% to just under $50 million (or 36 cents a share) from about $130 million (81 cents a share) in the same quarter a year ago. Its shares lost over 8% of their value after the annoucement and hit a 52-week low of $18.80 in trading on the New York Stock Exchange during this past day.
Despite the distraction of Edmundson’s problems, his quick exit may actually help RadioShack. This is a company that is desperately in need of a new vision — or at least a plan — and it was clear that Edmundson no longer had the credibility with the board and employees to pull one together. It’s hard for a company to distinguish itself in the marketplace when all it seems to be doing is selling cellphones.
Meanwhile, the Wired GC points out that the Edmundson/Radio Shack affair actually reflects a simple lesson — effective leaders lead by example.